Climate Change Policy Targets and the Role of Technological Change

In this paper, we present results of simulationexperiments with the TIME-model on the issue ofmitigation strategies with regard to greenhouse gases.The TIME-model is an integrated system dynamics worldenergy model that takes into account the fact that the systemhas an inbuilt inertia and endogenouslearning-by-doing dynamics, besides the more commonelements of price-induced demand response and fuelsubstitution. First, we present four scenarios tohighlight the importance of assumptions on innovationsin energy technology in assessing the extent to whichCO2 emissions have to be reduced. The inertia ofthe energy system seems to make a rise ofCO2 emissions in the short term almostunavoidable. It is concluded that for the populationand economic growth assumptions of the IPCC IS92ascenario, only a combination of supply- anddemand-side oriented technological innovations incombination with policy measures can bring the targetof CO2-concentration stabilization at 550 ppmv bythe year 2100 within reach. This will probably beassociated with a temporary increase in the overallenergy expenditures in the world economy. Postponingthe policy measures will be more disadvantageous,and less innovation in energy technology willhappen.

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